Brexit’s tentacles have spread to the stock market and toppled London’s crown as Europe’s largest stock exchange to the other side of the English Channel. Paris is taking advantage of the pull of luxury brands, such as LVMH SE, owner of Louis Vuitton, or Kering SA, owner of Gucci, and is picking up one of the UK’s most prized titles. Currently, companies listed in the French capital are worth $2.823 trillion, while the London stock market stands at $2.821 trillion, according to data compiled by Bloomberg.
Brexit “permanently damaged” the country
The news came as a surprise to no one, not even staff associated with the Bank of England. In the words of one of the institution’s advisors Michael Saunders, Brexit “permanently damaged” the country. “There would be no need for a tax increase or a reduction in spending if Brexit had not reduced the potential of the economy so much,” he stressed during an interview broadcast on Bloomberg TV.
He is referring to the tax increase plan of the British Finance Minister, Jeremy Hunt, who on November 17th will present before the House of Commons of Parliament to tackle the country’s economic crisis and its galloping debt. The measures are in contrast to the controversial fiscal measures of former Prime Minister Liz Truss, which led to her resignation 45 days after accepting office.
Brexit has hit hard at the value of companies, especially those most dependent on foreign trade. In 2016, the year of the referendum that sentenced the exit of the United Kingdom from the European Union, British shares accumulated a value of $1.5 trillion over French shares. Now, if we take the main UK stock indexes as a reference, we see a fall of 0.4% in the FTSE 100 and 17% in the FTSE 250.
Certain companies, such as JD Sports Fashion Plc, have plunged in value by more than 40% due to the contraction in trade. Part of the blame lies with border control at the British port of Dover, the scene of mile-long queues of trucks that suffered the consequences of additional customs procedures due to Brexit.
The collapse of the pound has also been one of the immediate consequences of the country’s political and economic turmoil. If the US dollar is taken as a benchmark, the pound has depreciated by 13%, while the euro has weakened by 9.2% in a year. In total, the contraction of the British currency is more than 5% compared to the 3% rise in the euro index.
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